First, let me tell you why I would like to sign him, and then I'll give you my theory on why I think it's still possible.
I think the reason we should sign him is obvious: because he's a very highly regarded prospect at a position of need. I haven't heard of any issues with him (i.e. grades or character etc), aside from his height. And frankly, I think that's a stupid reason to pass on DM.
Yes, it's true that he'll have trouble covering a 6'3 receiver on a fade route. However, he plays physical and he's capable of keeping up with the vast majority of WRs. Conversely, a CB who is 5'11 or 6'0 or whatever might be able to defend the fade, but he might also get beat deep on a regular basis.
The thing is - not every pass is thrown at the perfect height where a 6'3 receiver can get to it but a 5'9 CB couldn't get to it. In my opinion, the number of balls thrown that DM couldn't get to because of his height is pretty small - no larger than the number of balls thrown that, for example, a slower CB couldn't get to.
So the solution is simply - dont ask DM to cover a tall receiver in fade situations. Put him on a slot receiver or substitute for him in a red zone situation.
And here's why I think it might be possible that we still land him: recently we hear rumblings that DM might surprise people, and then Grimes suddenly remembers that he doesn't like the cold??
We'll never know for sure what goes on behind the scenes. But I think it's certainly possible (remember, that doesn't mean "certain") that our coaching staff caused Grimes' memory of the cold to be refreshed. Perhaps the staff feels good about DM and therefore told Clarance Murphy to look elsewhere, thereby taking the chance that Grimes may or may not leave.
Oh well. We should know soon, I think he's announcing at the AA game.